For Nevada Casinos, Threats in California

Sunday

Indian casinos in California have slowly been pressuring their competition across the border, resulting in a prolonged slump for many of Northern Nevada’s gambling towns.

LINCOLN, Calif. — The Thunder Valley casino, outside Sacramento, has all the trappings of a modern gambling resort: endless rows of slot machines, a high-end spa offering gold-leaf facials and the type of performers — Tony Bennett, Peter Cetera — for whom casinos were seemingly invented.

But ask Ken Lawson why he brought his father, George, here on a recent afternoon, and his answer has nothing to do with shows, slots or service.

“It’s just a shorter drive,” said Mr. Lawson, who lives in Rio Linda, a nearby suburb.

Like many, Mr. Lawson favors California convenience over old-school Nevada glitz. A decade after California voters expanded gambling on tribal lands, Indian casinos here have slowly been squeezing their competition across the border by building increasingly elaborate — and exceedingly accessible — gambling centers along the major freeways leading from the Bay Area and the Central Valley over the Sierra Nevada.

The result has been a prolonged slump for many of Northern Nevada’s gambling towns. In Reno, “the biggest little city in the world,” gambling revenue has declined in 30 of the last 37 months, according to Michael Lawton, a research analyst with the Nevada Gaming Control Board. And while the recession has certainly taken its toll on gambling nationwide, experts say the problems have more to do with proximity than pocketbooks.

“Less people are coming over the hill,” said Frank Streshley, chief of the tax and license division of the Gaming Control Board.

In Reno, total gambling revenue is off 25 percent since the spring of 2007, according to David G. Schwartz, the director of the Center for Gaming Research at the University of Nevada, Las Vegas, while other nearby towns on Lake Tahoe have seen declines of more than 40 percent.

Frank J. Fahrenkopf Jr., president and chief executive of the American Gaming Association, the casino industry lobbying group, said the effect on Reno and nearby cities is particularly profound when snow shuts off the mountain passes.

“I’ve been under a car many times putting chains on,” said Mr. Fahrenkopf, who grew up in Reno. “I can’t think of another market anywhere in the United States that’s been hit as hard as Northern Nevada by the spread of Native American gaming.”

Congress set up the statutory basis for the regulation of Indian gambling in 1988, and in 2000, California voters passed a ballot initiative that allowed slots and house-backed card games like blackjack on Indian land. (Before that, only so-called Class II games — primarily bingo and poker — were permitted.)

Since then, the state has become the single-largest Indian gambling market in the country, with estimated revenues of $7.3 billion in 2008, according to Alan P. Meister, an analyst with Nathan Associates, an economic consulting firm. And at least some of that growth has to do with convenience.

And while early tribal operations may have been little more than small, bland card rooms, recent renovations are enhancing properties throughout Northern California. Over the last two years, several tribes have added hotels and event centers and have expanded floor space.

More than such amenities, though, what California casinos seem to be banking on is location. Thunder Valley is owned by the United Auburn Indian Community, which is made up of Miwok and Maidu Indians. It expanded to 200,000 square feet of gambling space over the summer, adding a steakhouse, a 300-room hotel and a cabana-ringed pool. The casino sits in the middle of a patch of browning farmland, flanked by a few lonely ranch houses and a nearby landfill, but is also just minutes off Interstate 80, a well-traveled corridor between the Bay Area and Reno.

To the south of Thunder Valley is the hulking Red Hawk casino, opened by the Shingle Springs Band of Miwok Indians just outside Sacramento in December 2008. The opening caused traffic jams along Highway 50, a main east-west route to South Lake Tahoe from which the casino has its own exit.

Meanwhile in Reno, several casinos are out of business or have been closed for extended periods in the city’s downtown, where low-rent motels sit near a new minor-league ballpark and the National Bowling Center.

With fewer Californians at the tables, many Reno casinos are now focusing on local players, using loyalty cards, inexpensive entertainment and direct mail and e-mail offers. And while the Reno downtown district still has clusters of casinos — something the California tribes, almost all single-casino operations, do not offer — the most successful casinos in Reno offer more basic suburban amenities.

“Good parking, well-lit floors, good security and easy access have become more attractive for local clientele,” said William Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at University of Nevada at Reno.

Reno tourism officials, meanwhile, began a marketing campaign last year called “Reno Tahoe, USA — Far From Expected,” which emphasized activities like world-record motorcycle jumps, an exhibit featuring Elvis Presley’s Cadillac and the world’s largest sporting goods store. And a radio ad in the Bay Area, featuring a talking bighorn sheep, boasts of the region’s “trails, beaches, fairways, rivers,” but makes no mention of casinos.

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